With a certain amount of fanfare, the California Legislature has expanded the
State's Anti-Indemnity Statute to provide additional protections to residential
subcontractors. Although the neWstatute, found in California Civil Code section 2782,
will provide some relief, that relief is likely to be limited in its impact.
California's indemnity statute, portions of which date back to 1872,has been
applied in a broad variety of insurance and non-insurance contexts. Until 2006,the only
prohibition or anti-indemnity provision in the statute for contracts with private persons
or entities was contained in Civil Code section 2782(a)which prohibited indemnitees
(parties claiming indemnity rights) in construction contracts from being defended or
indemnified for their sole negligence or willful misconduct. In 2005, the State
Legislature revised Civil Code section 2782to add new sub parts Civil Code sections
2782(c)and (d) which preclude builders in residential construction contracts from being
defended or indemnified for claims which arise from the work of others. The new sub
parts became effective January I, 2006 and apply to residential construction contracts
entered into after January I, 2006. The anti-indemnity statute was further revised,
effective January I, 2008,by the enactment of Civil Code section 2782(e)so that general
contractors, just as with residential builders, are precluded from obtaining indemnity
and a defense from a subcontractor for claims arising from the work of others (that sub
part applies to residential contracts entered into after January I, 2008). The antiindemnity
statute has now been further revised, effective January I, 2009,so that the
subcontractor will have defined periods of time to act and will face additional
consequences for failing to so act.
This new scheme, while relatively welcome news for subcontractors, has had
little practical impact so far because it only applies to contracts entered into after
January I, 2006,at the earliest (and most suits to date deal with residential construction
contracts entered into before that date). However, even with the passage of time and
the revisions effective January I, 2008and January I, 2009,the revisions to the antiindemnity
statute may have relatively minimal impact and could even pose additional
burdens on subcontractors.
This is so for a number of reasons.